Merchants demanding cash only for payment.

[LFP57]

Seen a segment on the news last night, the report was about a city councilwoman stopping by a grocery store in Detroit and they the merchant would only accept plastic, no cash. During the last 2 yrs, I've been to a number of small restaurants and stores that charge an additional fees is one uses plastic to pay for food, store items, the store employees claim that due to the bank fees, they can't afford to not charge for it. I recently had dinner at a large restaurant and they too, charged a different amount depending on if one uses plastic to pay.
Is this something you are seeing in your area as well? Merchants are demanding that you pay using plastic and then charge an additional fee as well, is it because the fees are being passed on to the purchaser, what is the incentive to demand cash only or is it just greed?

 

[Biker1mike]

After not seen it for some time. If I am told it will cost me more to use plastic I will drop my purchase on the counter and walk out. I carry little cash and use a debit card for everything.

 

[Tropical Jack]

The reality is that the business makes less money on a credit card transaction. I have noticed that my Kubota dealer and some of the lawn equipment dealers are charging a fee for credit card transactions now. I carry cash so that I can avoid these fees. I have not experienced a business that will not accept cash. But if your business has been robbed, I can understand the mentality.

Jack

 

[GeoHorn]

I can see it both ways. If a merchant wants to be the low-cost retailer…he must offer items at low-cost. If customer wants to pay with plastic which carries an extra-cost to the retailer…then why should a cash-customer have to pay for that?

I know of many gun-stores which have signage to that effect: “A 3% charge will be added to credit card purchases.”

With inflation having taken a toll of late…. I can see this becoming more and more prevalent…. I just want retailers to say-so…up-front. (Gas stations are who pizz me off…with signs that advertise Cash prices…but when you stick your card in the slot…the pump changes to a higher price.… when gasoline purchases are PREDOMINATELY paid by card.)

At least few gas stations offer flashing-alternating prices so you don’t discover the issue after you’ve already pulled-in and are standing by the pump…when you could have gone on down the road to the station that stands by the advertised price. THAT’s when I turn away and TELL them WHY I’m buying down-the-road instead of from them.

 

[DustyRusty]

They aren't demanding, they are requesting, and yes there is a big difference in how you word the question. There is no doubt that plastic costs a business more, but they can quickly fix that by just adding the costs to the selling price of the goods. I know of a lot of businesses that do this routinely. You have the choice of where to go to make your purchases, and if you don't like the price of the product, you are also free to shop elsewhere. Cumberland Farms offers a cash discount on gas if you use their company card which automatically debits your bank account. There are lots of more important things in life than bitching about store policies. Stop whining like a bunch of little girls!

 

[RBsingl]

Merchants receive a discounted amount from the credit amount charged and the percentage is higher for small merchants with some card "brands" being worse than others for merchants. One of the methods Sears used when introducing the Discover card was not charging the discount rate to merchants to create more acceptance on the merchant side, a creative way to buy their way into the market. When I first moved to Illinois, Farm and Fleet was cash or check only to avoid that and I suspect at the time they had a very low "bad check" rate with their customer base making that a lower expense than paying the card discount rate.

Merchants have to decide whether to avoid the cost by refusing cards, charging card users a premium, or spreading the cost across all customers. This discount rate is part of why cards are so popular with the issuers because it is part of their profit stream. I use a single credit card that is automatically paid in full from my checking account each month so I never pay interest charges but the card company still profits from my purchases by the discount rate charged to merchants.

I do automatically pay cash to a few small merchants who don't do a surcharge for credit cards as my way of helping local small merchants.

Rodger

 

[GeoHorn]

Here’s another point… “Cash-Back” cards. Just Where does that money come from for that “refund” you get when you use that favored-card?
I may be wrong, but I don’t recall being charged a premium for using my card…until I started getting “cash back” or “points”, etc.

 

[LFP57]

They aren't demanding, they are requesting, and yes there is a big difference in how you word the question. There is no doubt that plastic costs a business more, but they can quickly fix that by just adding the costs to the selling price of the goods. I know of a lot of businesses that do this routinely. You have the choice of where to go to make your purchases, and if you don't like the price of the product, you are also free to shop elsewhere. Cumberland Farms offers a cash discount on gas if you use their company card which automatically debits your bank account. There are lots of more important things in life than bitching about store policies. Stop whining like a bunch of little girls!

These were the words of the reporter, the merchant demanded cash only. You're such a pleasant person that has boats loads of money and couldn't care less about the inflation that is going on and how merchants want to charge an additional 3-4 % on top of the already high cost of products, now everyone are a bunch of whining little girls, really?

 

[fried1765]

After not seen it for some time. If I am told it will cost me more to use plastic I will drop my purchase on the counter and walk out. I carry little cash and use a debit card for everything.

Ditto !!!

Except...... absolutely no debit card for me!
Only rarely has any business tried to charge me a premium for credit card use.
If so,....I go elsewhere!

I pay (3) card balances in full every month!
Depending on the particular card I use, I get from 2% to 5% back on every purchase.
I use only cards with zero annual fee.

I get about $1,000 total back, every year!
The merchants collect the cash back for me,..... and the CC companies pay it to me.
What a wonderful system we have !

 

[chim]

Ditto !!!

Except...... absolutely no debit card for me!
Only rarely has any business tried to charge me a premium for credit card use.
If so,....I go elsewhere!

I pay (3) card balances in full every month!
Depending on the particular card I use, I get from 2% to 5% back on every purchase.
I use only cards with zero annual fee.

I get about $1,000 total back, every year!
The merchants collect the cash back for me,..... and the CC companies pay it to me.
What a wonderful system we have !

Pretty much the same here. One restaurant we frequent charges extra (I think 5%) for CC. However, they sell $100 gift cards for $85. Of course, the gift cards must be bought with cash.

 

[Poohbear]

It's been 7 years since I was in business BUT my contract with my CC processing bank was absolutely NO adding fees to a bill for accepting the customers card for payment. Debit cards didn't cost me any discount if processed as a debit & not a CC. I was paying only 1.75 % unless it was American Express , one of those really high point cards, or a keyed in entry instead of a swipe
I just built the fee into my overhead.

 

[GeoHorn]

Ditto !!!

Except...... absolutely no debit card for me!
Only rarely has any business tried to charge me a premium for credit card use.
If so,....I go elsewhere!

I pay (3) card balances in full every month!
Depending on the particular card I use, I get from 2% to 5% back on every purchase.
I use only cards with zero annual fee.

I get about $1,000 total back, every year!
The merchants collect the cash back for me,..... and the CC companies pay it to me.
What a wonderful system we have !

WHO do you think pays you those “cash backs”..?

It might be more palatable if merchants simply posted signs that say “Discount for Cash”.

Just two days ago, in an antique store, my wife bought me a “Hopalong Cassidy” hot-chocolate mug to replace the one I remembered from childhood that my Mother sold in a garage-sale.
When she paid CASH …(because she didn’t want me to see the charge on a card which would ruin the surprise)…. the merchant gave her 10%-Off.

(She didn’t know I’d suggested to the merchant to be certain my wife sees it.) LOL

 

[fried1765]

WHO do you think pays you those “cash backs”..?

It might be more palatable if merchants simply posted signs that say “Discount for Cash”.

Just two days ago, in an antique store, my wife bought me a “Hopalong Cassidy” hot-chocolate mug to replace the one I remembered from childhood that my Mother sold in a garage-sale.
When she paid CASH …(because she didn’t want me to see the charge on a card which would ruin the surprise)…. the merchant gave her 10%-Off.

The point I make is, that I get the cash back!
I don't care if the selling merchant is the one who ponies up.
He simply marks his prices up to pay my cash back,...and every other buyer helps to pay for it.
Those who pay cash, for simple everyday purchases, are getting stuck with much of my cash back payment.
We are living in the "me" era, and cash back, is all about ME!

 

[Geezer3d]

The cost of the transaction, including whatever the credit card companies or other finance companies charge, is included in the price of the stuff you buy. If you are not offered a cash discount then you are paying for the convenience of using credit cards even if you choose to pay cash. A surcharge for using a card is the same as a cash discount.

A merchant who decides to not accept cash is saving some expenses as well. He does not have to keep a supply of small bills and coins on hand and replenish that. He does not have to visit the local bank regularly and pay the fees charged by the bank. A commercial bank charges a fee for each check a business deposits. And, most importantly, the merchant who does not use cash does not have the risk of being robbed and the cost of insurance and security related to that.

 

[LFP57]

It's been 7 years since I was in business BUT my contract with my CC processing bank was absolutely NO adding fees to a bill for accepting the customers card for payment. Debit cards didn't cost me any discount if processed as a debit & not a CC. I was paying only 1.75 % unless it was American Express , one of those really high point cards, or a keyed in entry instead of a swipe
I just built the fee into my overhead.

That's what I thought, I'd always heard that 2% was the norm for CC purchases, now I've seen merchants charging nearly 4%. For some, 4% is not much, but for many, it adds up and it's hard on them.

 

[DustyRusty]

Here’s another point… “Cash-Back” cards. Just Where does that money come from for that “refund” you get when you use that favored-card?
I may be wrong, but I don’t recall being charged a premium for using my card…until I started getting “cash back” or “points”, etc.

First you have to understand that there are a couple of levels within the credit card system. I will specifically address Visa and Master Card since they are the two largest credit card companies. They both sell their branded service to people that do the processing of the sale, but there is also the merchant's bank in between the processor and the merchant. Below is how it works
Visa / Mastercard / Discover / Amex / etc.
Merchants contract with their local bank to accept credit cards
Local bank contracts with the processor to handle the transactions
the processor takes a piece of the sale in fees charged to the merchant
the processor sends a percentage of the fees back to the local bank, and a percentage is also sent to Visa / Mastercard / Discover / Amex / etc.
The merchant pays the following types of fees some are fixed rates and other are a percentage of the sale:
Card present or not presented is charged a different rate... small merchants 3% presented 4 !/2% not presented i.e. telephone orders, or online ordering through the website.
Varying fees are based on the type of loyalty card, and that list is quite extensive.
Per transaction fee, can be as low as $0.03 to as much as $0.25 or more depending on the merchant's history of processing volume.
If you are a large enough merchant and have a long-term relationship with the bank and the processing company, you might be able to get what is called a blended rate. You will pay a small flat rate per transaction (3 to 8 cents) and a low discount rate of 1 1/8 - 3% and no loyalty fees. To get this type of "deal" you have to have extremely low chargeback problems or other complaints and be processing over a million dollars a year.
I have pulled up one of the monthly statements from one of my companies from 2016 to show how the fees can add up.

 

[DustyRusty]

The cost of the transaction, including whatever the credit card companies or other finance companies charge, is included in the price of the stuff you buy. If you are not offered a cash discount then you are paying for the convenience of using credit cards even if you choose to pay cash. A surcharge for using a card is the same as a cash discount.

A merchant who decides to not accept cash is saving some expenses as well. He does not have to keep a supply of small bills and coins on hand and replenish that. He does not have to visit the local bank regularly and pay the fees charged by the bank. A commercial bank charges a fee for each check a business deposits. And, most importantly, the merchant who does not use cash does not have the risk of being robbed and the cost of insurance and security related to that.

The banks charge their retail business customers for giving them cash and coin. It is a percentage of the amount that you take out. Large retailers have their cash delivered by armored cars, which also remove the cash that comes in from the daily receipts. They pay to have that counted and deposited into their bank accounts. Banks make money coming and going. Someone has to pay for that teller behind the counter or the ATM machine in the lobby.

 

[jyoutz]

I carry very little cash and use my debit card everywhere. I have never been charged a higher price for plastic. I have encountered a few small independent restaurants that only take cash, but this is uncommon. I’m finding more and more places that don’t take cash anymore, and some like Walmart make it difficult by only having a few registers that take cash.

 

[Bmyers]

It might be more palatable if merchants simply posted signs that say “Discount for Cash”.

I think you hit it on the head there. How it is presented could make a huge difference. Raise/charge more across the board, but offer a "discount" for cash purchases. Now it appears that the merchant is giving you something verses taking away something from you, but in the end, it gets everyone to the same place.

 

[GreensvilleJay]

Here, until very recently stores( aka 'merchants' ) could NOT charge if you more if you used a credit card. if they do now they MUST POST those fees.
Also, they(merchants) can NOT limit your cc purchase. If you have a CC limit of 10K, and 9500 is available, you CAN put 9500 onto your card even though the store says '1K limit'. If they refuse, call the CC company, while at the register and one of two things happen. 1- your purchase WILL be processed or 2- the merchant will be cut off from using that CC company. 5 or 6 times I've been told....every time #1 happens.